In Re: Ahmed Husain Zubair

Background

Ahmed Husain Zubair, representing himself, appealed two orders entered by the U.S. Bankruptcy Court for the Southern District of New York in his Chapter 13 case. The first order, dated September 28, 2020, terminated the automatic stay as to his property at 90 Bruce Avenue in Yonkers and denied his objection to Wilmington Savings Fund Society’s mortgage proof of claim. Fay Servicing, LLC acted as Wilmington Savings Fund’s servicing agent. The second order, dated April 26, 2021, dismissed Zubair’s Chapter 13 case. The district court had jurisdiction to review both bankruptcy appeals.

The mortgage was originally executed with Bank of America, N.A. in 2007 for a $470,000 note. The opinion describes later transfers of the note and mortgage, including a transfer to Wilmington Savings Fund. The mortgage creditor filed a proof of claim listing $924,085.80 as the total claim, including $525,255.72 in mortgage arrears. Zubair’s proposed Chapter 13 plan called for total payments of approximately $19,682 over the plan period.

Appeal of the September 28 Order

Zubair challenged the termination of the automatic stay and the denial of his objection to the mortgage claim. He argued that the mortgage documents were false, that Fay Servicing was not a proper party to request relief from the stay, and that the proof of claim and amended proof of claim did not comply with bankruptcy rules.

The court rejected these arguments. Under Bankruptcy Rule 3001, a properly filed proof of claim is initial evidence that the claim is valid and correctly stated. The court held that the mortgage creditor supported its claim with the note, mortgage, and assignment documents, while Zubair did not provide evidence sufficient to overcome that showing. The court also held that his challenge to the mortgage documents was barred by claim-preclusion and issue-preclusion principles because related foreclosure and federal proceedings had already addressed matters that were raised or could have been raised earlier. The court further held that the state-court foreclosure judgment prevented the district court from reviewing and rejecting that judgment under the Rooker-Feldman doctrine.

The court also concluded that Fay Servicing qualified as a party in interest entitled to request relief from the automatic stay. The documents submitted in support of the claim showed enough of a legally enforceable interest in the mortgage to establish that status. The court found that the proof of claim and amended proof of claim complied with the applicable bankruptcy rules. It rejected Zubair’s arguments about the absence of a mortgage-payment-change form, the timing of a postpetition-fee notice, and the claims-filing deadline.

The district court therefore affirmed the September 28 Order, including the termination of the automatic stay and the denial of Zubair’s objection to the mortgage proof of claim.

Appeal of the Dismissal Order

The bankruptcy court dismissed Zubair’s Chapter 13 case under the bankruptcy statute allowing dismissal for cause. The district court upheld that decision. It explained that a Chapter 13 plan must be feasible, meaning the debtor must be able to make the required payments and comply with the plan.

The proposed plan required three monthly payments of $182.08 followed by fifty-two monthly payments of $368. The bankruptcy court found that Zubair had made only sporadic payments, had missed several months, and was delinquent in payments owed to the trustee. The district court held that this failure showed he could not comply with the proposed plan and supported dismissal.

The district court also agreed that the plan was not feasible because it proposed paying approximately $19,682 while the mortgage arrears claim was approximately $525,256. In addition, the court held that the plan failed to properly list the mortgage arrears as a secured claim. That failure independently prevented confirmation of the plan and supported dismissal.

Finally, the court rejected Zubair’s argument that the bankruptcy court should have sent the case to a loss-mitigation program. The court explained that the program encourages debtors and lenders to communicate in an effort to reach an agreement but does not create an entitlement to a loan modification. The court found no error in dismissing the case instead.

Disposition

Judge Vincent L. Briccetti affirmed the bankruptcy court’s September 28 Order and Dismissal Order. The district court directed the clerk to terminate and close both appeals. It also certified that an appeal from the district court’s order would not be taken in good faith and denied permission to proceed without paying the filing fee for purposes of an appeal.